It’s an understatement to say the mobile landscape is on fire. According to a recent Cisco report, it’s likely that there are more mobile devices on the planet than people.
To no one’s no surprise, the world’s advertising giants are pouring their hearts, souls and budgets into mobile. In Q4 2013, Facebook became a mobile-first company — 53% of the company’s ad revenue came from smartphones and tablets. A couple of weeks ago, Twitter announced the release of a new mobile ad product using its app promotion suite.
The advertising landscape for mobile apps is beginning to diversify, evolve, and mature — between social media, in-app marketing and mobile web display advertising, brands have more options than ever for reaching audiences. “In mature markets, and even in many developing markets, advertisers know that the best place to reach consumers is right in their pockets—on their mobile devices,” said Mladen Raickovic GM of AdParlor, Adknowledge’s social media product.
With choice comes confusion, however. As a media buyer, marketing lead, or mobile user acquisition manager, you might be wondering, “How the heck do I get started, what does the landscape look like, and how do I decide what’s right for my clients and team?”
We wrote this guide as a pillar to help orient you; bookmark this link, pass it along to your team, and keep it close when you’re shopping for your next mobile advertising partner. We’ve simplified hours of research and months of experiential learning into a ten minute read.
Step 1: Compare and Test Pricing Models
As an online advertising veteran, you’re likely versed in cost-per-click (CPC), cost-per-mille (CPM), and cost-per-acquisition (CPA) models. This pricing evolved from a key need in the marketing community: the ability to connect ROI to the most granular units of advertising spend.
In the mobile ecosystem, marketers should expect to pay on a cost-per-install (CPI) and cost-per-engagement (CPE) basis. Some in-app and mobile web ad units are also priced as CPC or CPM — similar to desktop-focused user acquisition models.
CPIs, CPCs, CPMs, and CPEs can range from a few dollars to more than $20. “The price points vary based on the markets you’re trying to reach,” AdParlor’s Raickovic said. “But there’s also the variables of competition in the ecosystem and the advertising platform you’re targeting.”
Here is a list of additional variables that typically affect price:
- Device-level targeting (i.e., Android vs. iOS)
- Geotargeting (i.e., U.S. vs. international traffic)
- Ad unit size, style or shape
- WiFi-only targeting
Finding the Right Model for Your Goals
When choosing a pricing model, it’s important to look at the business outcome you’d like to achieve. Cost alone will tell you very little about whether you’re making a wise investment. It’s important to compare what you’re spending with the anticipated lifetime customer value (LTV). In other words, what ROI do you expect to achieve from your ad spend?
For more information, check out Adknowledge CEO Ben Legg’s guide to LTV here. He walks through a platform-agnostic model that brands can harness to evaluate the ROI of their marketing investments.
At first glance, a CPI of $19 might seem expensive. You may feel inclined to switch your targeting so you’re acquiring users at $5 because the cheaper price point seems like a better value.
Let’s say, however, that users acquired at a $19 CPI convert at a $100 LTV and that the $5 users convert at $0. Given this scenario, the $19 CPI seems like a no-brainer — and a wiser marketing investment — even though the raw cost is higher.
Putting “Thought” to Action
The best way to choose a pricing model is to run a series of small tests. There’s no way to predict LTV from a particular traffic source. Without running a series of calculated experiments, you’re probably throwing darts in the dark.
Adknowledge’s team of ad operations specialists are well aware that online marketing is a field driven by perpetual learning. The company’s social media product, AdParlor, is one of only 13 companies worldwide designated as a Facebook Strategic Preferred Marketing Developer (sPMD). AdParlor is constantly looking for ways to develop clear competitive advantages for clients. Experimentation comes with the job.
Taj Nayeem, one of AdParlor’s Toronto-based ad operations specialists, recently ran a test in which she compared pricing versus performance models of a particular campaign for a brand that we’ll call “Advertiser X.”
On Facebook, it’s possible to create video-based mobile advertisements. Taj wanted to see if these types of ads would increase the efficacy of Advertiser X’s app install campaigns.
She focused on three business questions:
- Are video-based News Feed campaigns more effective than non-video campaigns?
- Which devices are most cost effective?
- Can WiFi-only ads increase conversions?
She tested nine separate CPI campaigns, starting with “device” as the umbrella for Advertiser X’s campaigns:
- “Install Now ” was the call-to-action (CTA) in all three cases.
- Demographic targeting was set to reach adult males in the United States.
- Interest-based targeting was based on keywords.
- Target groups were based on users who had already installed similar paid games.
- Ads were in the form of a trailer, with insight into game play.
- Our goal was to see which campaign reached 20 conversions first, at the lowest possible price points.
- The potential audiences across all three devices was approximately 9 million people.
- Each ad started with the same CPI bid of $2.50 with a daily budget of $300.
Here is what Taj learned for Advertiser X:
- The Android group reached 20 conversions after one day on February 14, 2014 at a bid of $2.50. The average CTR for this campaign was 1.5%, and the average conversion rate was 15.9%. Video (this includes WiFi-only ads, as well) performed better than non-video (369 conversions vs. 11). WiFi ads with video outperformed all groups making up 224 conversions of the total 369 video conversions.
- The iPhone group reached 20 conversions after 12 days, on February 25, 2014 at a bid of $15. Online one campaign—video with WiFi—generated conversions (29 in total). The remaining two campaigns (video and no video) received 8.2% of all the impressions but generated no conversions during the test.
- The iPad campaign reached 20 conversions after 15 days, on February 26, 2014, at a bid of $15. Video with WiFi was the top performer in this bucket, generating 29 of the 32 conversions. What’s interesting to note is that when we weren’t targeting WiFi-only devices, non-video ads performed better than video ads.
As a next step, Advertiser X would need to analyze these newly acquired users for a specified period of time. How much are these users worth? How much revenue do these users generate over a month, quarter, and year? These data points require a process of constant learning and are crucial to your own customer acquisition strategy.
Step 2: Cast Your Net Wide
Building a Conversion-Driven Framework
For marketers, options are a double-edged sword. You have the option to run ads across a variety of channels — from Facebook to mobile websites, apps, and now Twitter.
While your options are multifaceted, your goals are similar: you need to reach the right audiences with the right messages at exactly the right time.
Ad units are a means to an end goal of conversion and revenue optimization. Your ads shouldn’t be beautiful for beauty’s sake; you need to be effective for impact’s sake. Each ad network and ad unit comes with a set of strengths and weaknesses. You can build a conversion-driven framework by catering to the strengths — and understanding the weaknesses — of each option.
- In Q4 2013, 68% of Facebook’s mobile revenue came specifically from the Mobile App Install ad unit. AdParlor saw strong performance among e-commerce and mobile gaming advertisers who have focused on this particular unit, driving new users to their mobile apps across iOS and Android devices.
- Install-based ads were most engaging when placed within Facebook’s News Feed. In Q4 2013, 85.5% of AdParlor’s revenue came from ads delivered through Facebook’s News Feed. This unit drove the highest engagement and the best ROI, regardless of the advertiser’s vertical.
- With Facebook Custom Audience targeting, it’s possible to target users based on specific actions they may have taken on your brand’s desktop or mobile website. It’s also possible to create Lookalike Audiences of your highest value users, based on Facebook’s wealth of psychographic data.
- In addition to acquiring new users, Facebook’s ad products support re-engagement ads to help improve user retention and to boost lifetime value.
App and Mobile Web
- Ad units within apps and mobile websites follow standard IAB guidelines (see above). In addition to standard ad formats, Adknowledge allows marketers to create interstitials to help ensure that users see the message your brand is promoting, at exactly the right time.
- Adknowledge is able to match these ads to user profiles based on their interests, existing app preferences and cross-platform activity. We synthesize data sources to deliver a cross-platform advertising experience.
- Knowing our users, we place ads within apps and mobile sites that are likely to align with an advertiser’s specific marketing objectives.
- Adknowledge analyzes user engagement, response and install patterns to optimize mobile ads on the fly. The company uses real-time data to make sure brands are reaching audiences at exactly the right time during their mobile journeys.
Twitter’s ad marketplace is built upon MoPub’s existing technology that reaches more than a billion unique devices and handles more than 130 billion ad requests inside Android and iOS devices every month.
While Twitter’s ad product is relatively new, it is already one of the largest ad exchanges in the world.
We’re dealing with a brand new ad ecosystem built on an established technology framework — a strong opportunity for marketers to reach Twitter’s real-time driven audience.
While this landscape is relatively new, we can already see rich, mobile-first ad units designed for compelling an attention-grabbing user experiences. Twitter’s ad ecosystem presents marketers with brand new terrain — and the earlier your brand can start testing, the better.
Step 3: Work with Partners (and Technologies) You Can Trust
To call the advertising ecosystem “intense” would be an understatement. Higher price points are the sign of a mature — and sometimes oversaturated — advertising ecosystem.
“There’s too much money to be made with that ad product to be guessing haphazardly.” ~ Mladen RaickovicYou need a combination of people, data, and technology to help your brand stay competitive. That’s why it might be valuable to work with an advertising partner that tests dynamic creatives in real-time, analyze data from similar advertisers, and run continuous experiments.
Success in mobile advertising begins with asking the right business questions — and you don’t need to do it alone. To answer those business questions, you need technology to help you reach user acquisition goals at scale and to make sure that your marketing investment is always fully optimized.
“If you’re unsure of the path you should be taking with mobile app installs, find an expert,” AdParlor’s Mladen Raickovic said. “There’s too much money to be made with that ad product to be guessing haphazardly.”
Two smart marketers are infinitely better than one. Don’t feel like you have to navigate this complex mobile journey alone. Marketing is creative, and sometimes, you need a sounding board. Read through case studies before running your first user acquisition test, validate ideas with the marketing community (through forums like GrowthHackers.com), and reinvest what you learn into a unique strategy for your brand.
Let’s start the discussion.
Ready to get started with mobile app install ads? Have a question? Contact Erica, our marketing manager, using the form on the right to learn more.
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